It was ten years ago that RBS had to be injected with £45bn bailout package that was funded by taxpayer’s money. But according to the head of the lender – Ross McEwan, it would take another decade for the bank to regain the lost reputation.
It should however be noted that currently, the cash reserves with RBS is one of the highest in the industry.
But the bank still had a long way to go to rebuild the trust among investors and customers even though its finances may now be fixed, McEwan said in a television interview.
“I think it will take five – maybe even 10 – years to rebuild trust to where we’d want it to be,” he said.
During and after the 2008 global economic crisis, the reputation of RBS was perhaps the hardest hit among all banks. The bank was at the receiving end of a highly critical report from the Financial Conduct Authority because of its alleged mistreatment of hundreds of smaller customers after the financial meltdown, in addition to the bank having to cough up billions in fines and compensation.
The shockingly cynical culture in some parts of the bank was revealed in leaked emails from RBS staff who were found to be encouraging colleagues to “give business enough rope to hang themselves” and acquiring property from companies in distress at throwaway prices though an RBS subsidiary – which were later sold out at huge profits.
The bank was also charged of having crossed the regulatory limits – especially its business-lending activities, by the banking watchdog, the FCA, after it conducted a four year long investigation. This added insult to injury to the bank – severely denting its image and reputation.
McEwan admitted that some customer gad been failed by the treatment of the bank and apologised for the same during the interview.
“We were not there supporting customers in the way we should have been and for that once again I apologise.”
It has been five years now that McEwan has been attempting to oversee what he describes as “one of the biggest turnarounds in corporate history”.
The bank was in a dire state after these incidents compared to what it was before the 2008 global financial crisis.
In the last ten years, the bank has been forced to exit from 41 countries which have resulted in over 130,000 employees becoming redundant. The overseas revenue generated by the bank currently is just 7 per cent compared to the nearly 40 per cent it generated at one point in time. The lending of the bank has also drastically fallen from about £2.2 trillion to £748bn.
This has been a painful transition for the bank. The amount spent by the bank in fines compensation and restructuring totals to about £63bn which means that the entire £45bn of the bailout package had been used up by it.
McEwan acknowledged that the taxpayers’ money would most likely never be completely paid up by the bank even though it is now making a profit of about £1bn every quarter and has also begun to pay some dividends to shareholders. .
“We will never be simple – but we will be simpler,” he said and added that he considers the threat of cyber-attack the bank’s number one risk.
(Adapted form BBC.com)